What To Remember When Divorcing While Preparing For Retirement
Going through a divorce and preparing for retirement at the same time can be challenging. Here’s how to cope.
Getting divorced later in life can feel like a stressful and intimidating undertaking. While, as MarketWatch reports, the divorce rate for those aged 50 and over has more than doubled since 1990, the fact remains that ending a marriage later in life is a very scary step to take, even if it eventually leads to greater independence and well-being. One of the biggest stress factors affecting grey divorcees is the fact that many are going through divorce while also preparing for retirement. Below is a look at the impact grey divorce has on retirement planning and how to prepare properly.
Being realistic about expectations
People often have exciting plans for their retirement, and while it is certainly good to be optimistic, it is also important to realize that one’s financial position will likely be at least somewhat reduced after a divorce. After all, whereas prior to a divorce two spouses may have been sharing many expenses on two incomes, after a divorce income may go down substantially whereas expenses may not drop quite as dramatically. For many, a grey divorce will require some downsizing. While this can be disheartening at first, it will eventually allow one to have the financial independence that is necessary to thrive after a divorce.
Taking the house into consideration
The house is usually a big issue in a grey divorce. For one, it may be nearly or completely paid off, meaning that whoever ends up with the house also ends up with a significant financial asset. Secondly, older couples may have lived in the house for a very long time, so there are often a lot of memories tied up with the property. While it is easy to get sentimental about the marital home, it is also important to be practical. Is staying in the home realistic on a reduced income? While keeping the home in a divorce may feel like a “win,” expenses for taxation, upkeep, and maintenance can soon leave one “house poor.” As CNBC points out, a better alternative may be to sell the home and use the proceeds to pursue one’s retirement dreams.
Know what’s up for division
Dividing property fairly in a grey divorce is extremely important since those going through it often have very little time before retirement to rebuild their finances. That’s why it is important to know what is actually up for division. For example, many people are unaware that they likely have a right to a share of their ex-spouse’s retirement funds, including pensions. Those are significant financial assets that could make a big difference in how comfortable one’s retirement is.
Family law assistance
For those going through a grey divorce, it is paramount that one gets the divorce settlement right the first time around since there are rarely any do-overs. An experienced family law attorney can assist clients in identifying what to pursue during divorce negotiations so as to protect that client’s best interests and well-being for the years to come.